Item 05 - Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Ave.

Home Browse Search

Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue June 21, 2022 Page 3 2 8 1 5 of Orange require the City to subordinate our loans to their senior loans. Staff is also seeking approval for future Subordination Agreements by various lenders that may be required after the project is completed. For the Housing Authority actions, the eight additional project-based vouchers are necessary to pay for an unanticipated increase in development costs. Combined the project will have up to 15 project-based vouchers from Santa Ana together with 43 project- based vouchers from the Orange County Housing Authority. Regarding the amendments to the Ground Lease, revisions were requested by U.S. Bank in order for the bank to approve their senior loan for the project. Finally, the Land Use Covenant and the Equitable Community Revitalization Grant (“ECRG”) Agreement with the State of California Department of Toxic Substances Control are required because the joint Housing Authority and County property was found to have environmental contaminants. The Land Use Covenant restricts all future development on the specific portions of the property with remaining environmental contaminants and the ECRG funds will support additional remediation activities. DISCUSSION On July 2, 2019, City Council authorized the City Manager to execute a pre-commitment letter with The Related Companies of California (“Related”) and A Community of Friends (“ACOF”) for $3,971,440 in affordable housing funds consisting of $3,007,489 in HOME Investment Partnerships Program funds and $963,951 in Neighborhood Stabilization Program (“NSP”) funds for the development of the Crossroads at Washington affordable housing project located at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13) (the “Project”). The Staff Report from July 2, 2019 is attached as Exhibit 1 and the pre-commitment letter is attached as Exhibit 2. On August 17, 2021, City Council authorized the City Manager to execute a First Amended and Restated pre-commitment letter for an additional $333,742 in Neighborhood Stabilization Program funds to pay for an unanticipated increase in development costs. The Staff Report from August 17, 2021 is attached as Exhibit 3 and the first amended and restated pre-commitment letter is attached as Exhibit 4. After City Council approves a pre-commitment of funding for an affordable housing project, it takes a substantial amount of time for a developer to address all development issues and secure their remaining sources of financing in their capital stack. After three years since Related and ACOF received a pre-commitment of funding from the City, Related and ACOF are prepared to close on their financing and begin construction of the Project. In order for Related and ACOF (the “Developer”) to develop the Crossroads at Washington Project and in accordance with the first amended and restated pre- commitment letter approved by City Council on August 17, 2021, staff is recommending